Commercial Bank of Dubai records 22% increase in operating Profit in 2008

During the last quarter of 2008, the impact of the global financial crisis has negatively affected the market value of some of the bank's strategic equity investments in locally and regionally listed companies.

Although the respective companies are not impaired, as a measure of prudence and in line with IFRS, the Bank has booked an Dhs397m provision to reflect the decrease in market values. As a result the Bank posted a net profit for the full year of 2008 of Dhs771m, down 17.5% compared to 2007.

The results were announced following a meeting of the Board of Directors held on Tuesday, February 17, 2009. The Board has proposed issuing 25% Bonus Shares per share held and cash dividend of 15%. This is subject to the approval at the Annual General Meeting to be held on 18th March 2009.

Total assets reached Dhs36bn at the end of 2008, up 17% from year end 2007. Customer deposits increased by 22% to Dhs26bn and loans and advances showed a growth of 38% up to Dhs28.5bn. Lending to companies represents more than 89% of the Bank's loan portfolio, of which trade business constitutes 36%. Net interest income increased by 31%, fees and commissions increased by 27% and foreign exchange income increased by 109% compared to 2007. As a result of a strong increase of operating income and effective expense management, the bank's cost to income ratio improved to 29% in 2008.

The bank's capital adequacy ratio remains strong at 13%, well above the minimum required by the Central Bank. The quality of the credit portfolio improved further in 2008, with non-performing loans at Dhs241m by year end 2008, representing 0.83% of total loans. The provision coverage ratio for non-performing loans has reached 96%, after further provisions of Dhs83m were added in view of the uncertain economic environment in 2009.

Mr. Peter Baltussen, Chief Executive Officer of the Banks stated, "We are pleased that the results from our core operations have continued to grow across all lines of business, in spite of a slow down of the economy in the second half of 2008. In line with our conservative approach, the bank has taken a provision on its local and regional equity portfolio to reflect the decrease of the respective share-prices. However, it should be noted that the underlying listed companies continue to show strong profits and are not impaired."

He added, "The quality of our loan portfolio has remained very strong in 2008, while our bank's net interest margin continues to be one of the highest in the UAE banking sector. Over the last years the Bank has strongly invested in its franchise, its people and its systems and we remain well placed to continue to play a significant role in the further economic development of the UAE."

Established in the UAE in 1969, Commercial Bank of Dubai offers a wide range of consumer and commercial banking products and services through a network of 23 branches, 3 Islamic Branches, 2 Cash Offices and 145 ATMs in the UAE. The Bank is listed in DFM and fully owned by UAE Nationals, including 20% by the Government of Dubai.

These results are subject to approval by the Central Bank of the UAE and shareholders at their Annual General Meeting.